The Sunday Times reported that analysis by stockbroker Charles Stanley found that Rolls-Royce’s deficit is equivalent to 52% of its market capitalisation, currently £2.3bn. Royal & Sun Alliance has a deficit equal to 50% of its market value, £1.5bn, following falls in its share price last week.

ICI and BAE Systems also come out badly in the analysis, according to the paper. Charles Stanley estimates their deficits are, respectively, 26% and 21% of their market capitalisations.

The analysis will add to the controversy over FRS 17, the accounting standard that requires companies to show pension liabilities on their balance sheets.

Rolls-Royce’s Peter Barnes Wallis told the Sunday Times that the aero-engine maker’s pension schemes were fully-funded at the last actuarial review. The FRS 17 approach took a snapshot of the fund’s assets when markets had fallen dramatically. Rolls-Royce invests about 60% of its pension fund in equities.

Barnes Wallis said the Charles Stanley analysis failed to take account of changes to the funds’ liabilities. He said these are also likely to have fallen, because higher bond yields allow actuaries to use a higher discount rate when calculating the net present value of the liabilities.

Barnes Wallis said the necessary funding would be determined at the next actuarial review. He said deficit estimates ‘don’t mean anything. What’s important is what is the funding requirement to maintain the pension scheme’.